The range of real-world events people can bet on through so-called “prediction markets” seems to grow by the day. Millions of dollars were wagered in bets placed speculating on the death of Iran’s Ayatollah Ali Khamenei, who was killed in February during the U.S.-led attacks on Iran. Similar bets were placed on the likelihood of war with Iran in the weeks leading up to the initial U.S. strikes, and likewise on whether the U.S. military would capture Venezuela’s leader, Nicolás Maduro, which it did in January. The $40 billion prediction market industry has also expanded to include climate events. In 2025, users on the betting markets platform Polymarket spent more than $1 million betting on scenarios linked to the Palisades wildfires.
As a federally regulated exchange, Kalshi says it does not list contracts tied to war, death, assassination, kidnapping, terrorism or other violent events that regulators have deemed contrary to the public interest. But as the slate of real-world options grows to include wars, elections and geopolitical crises, experts say prediction markets generate “perverse incentives” and reward informational advantages that are much more difficult to police in certain real-world scenarios. Even though prominent Wall Street firms have rolled out a wave of new rules in recent weeks, and as U.S. regulators weigh a set of draft regulations about which kinds of bets should be permissible on prediction platforms, critics argue that these markets are uniquely vulnerable to abuses, including insider trading.
